OCC: Re-Default Rates at Three, Six, and Nine Months after Modification

Re-Default Rates at Three, Six, and Nine Months after Modification

Fourth Quarter 2008

As shown in the chart below, modifications that decreased monthly payments had consistently lower re-default rates, with significant payment reductions resulting in significantly lower re-default rates. When loan modifications decreased monthly payments by more than 10 percent, only 22.7 percent of those loans were seriously delinquent six months after modification. In contrast, when modifications left payments unchanged, 50.6 percent of such loans were seriously delinquent after six months, and for modifications that increased payments, the comparable rate was 45.8 percent.

Re-Default Rates of Modified Loans, by Changes in Payment (60 or More Days Delinquent) (Includes Loans Modified through the End of the Third Quarter)¹⁴
	Three Months after Modification	Six Months after Modification	Nine Months after Modification
Decreased by More than 10%	13.8%	22.7%	26.2%
Decreased by 10% or Less	18.5%	33.0%	38.6%
Unchanged	41.9%	50.6%	53.5%
Increased	29.2%	45.8%	49.1%

Re-Default Rates of Modified Loans, by Changes in Payment (60 or More Days Delinquent) (includes Loans Modified through the End of the Third Quarter)

¹⁴ Insufficient time has passed to measure loans originated in the second and third quarter at nine months or to measure loans originated in the third quarter after six months. Data include loans for those quarters only when they have had sufficient time to age the indicated number of months.

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Appendixes

Re-Default Rates at Three, Six, and Nine Months after Modification

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